News Story

MEDC Still Using Questionable Benchmarks

'What they are about is trying to find press release opportunities for politicians'

For years under former Gov. John Engler and former Gov. Jennifer Granholm, the Michigan Economic Development Corp. issued press releases with job projections that didn't materialize.

The Mackinac Center for Public Policy released a study in August 2009 that found that only 28 percent of direct jobs that were reported by the MEDC were actually created. In April 2010, Michigan’s Auditor General reported that only 28 percent of direct jobs announced became a reality.

Despite that, the MEDC is using "jobs committed" on its 2012 MEDC MIScorecard Performance Summary as a tool to measure its success.

It is unclear why the MEDC would continue to use a benchmark with a new name that has proven to be highly inflated.

Michael Shore, spokesman for the MEDC, was asked how "jobs committed" factors into the MEDC’s own evaluation and said in an email: “You would also be correct to report that 'jobs committed' means what a reasonable person would assume it to mean in plain English."

He acknowledged that the MEDC used this vague language but did not expand upon why.

The inflated jobs created under the MEDC started to make news in the final year of Gov. Granholm's tenure when the state kept issuing press releases about job creation while the state led the nation in unemployment.

For example, MIRS News researched the MEDC's job claims under Granholm and reported that the MEDC claim for total jobs created was 1.4 million, or 29 percent of the state’s entire labor force. At the same time, Michigan had the highest unemployment rate in the nation from April 2006 through April 2010.

In one Senate hearing in 2010, then State Sen. Nancy Cassis called out the MEDC for its job projections in news releases. "The press releases are an absolute disconnect with reality," Cassis said.

Some of the job proclamations were high profile. For example, in 2006, Google opened an office in Ann Arbor with projections of 1,000 direct jobs. Google's last report to the state was in 2008 and it reported 224 jobs. Google has said in the past that it won't release how many jobs it has in the Ann Arbor location.

"We know from history these things don’t pan out," said James Hohman, a fiscal policy analyst with the Mackinac Center for Public Policy. "In fact, they are spectacular failures."

Hohman said even if the job projections were accurate, it still wouldn’t amount to much help for the overall state economy.

Hohman said the MEDC is trying to have 16,727 jobs committed for 2012. By comparison, the state announced Aug. 2 that there were 202,960 jobs created in Michigan in the fourth quarter of 2011.

"What they are about is trying to find press release opportunities for politicians," Hohman said. "They are not up to the task of improving the state economy, which is fast moving and dynamic and not subject to bureaucratic approval."

Gov. Rick Snyder stopped the practice of the MEDC using “indirect” jobs in press releases. "Indirect" jobs were jobs estimated to be created by the expansion of another company. But the state and economists could never verify if the “indirect” jobs ever happened.

Previously, when asked why the state stopped using "indirect" or "retained" jobs, Shore responded, "We've got new management here."

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.